Hard to justify a CD with penalty at 4.6% when a no penalty at 4.4% exists (Sallie Mae/Savebetter). Give yourself the flexibility/liquidity option and give up the 0.2%, seems like the right move.
Well, step 1 is maxing out the i-bond contribution ($10k/pp/py) if you haven't done that, before May when the new rate will certainly be lower. So, do that first for your first $10k.
Edit: ^ The above has an argument against it depending on your view of how Feb-Apr CPI will impact the inflation component of the next i-bond rates. YMMV.
You didn't miss the boat at all btw, I just think this is a good time to buy. There's a lot of laymen inflationary talk and fearmongering going on but sharp traders who actually trade bonds are already looking ahead towards deflation here, and the retail interest-bearing products are going to catch up to that sentiment imo.
Anyway, in order after i-bonds if you don't need the money for 1-2 years:
1. 27-month (a little over 2 years but still) CD posted on SD today that was at 5%
2. 12-month t-bill (~4.65% or so, NOTE: This may be #1 if you live in a high income tax state)
3. CD like the one here for 4.6%
4. No-penalty CD at SallieMae for 4.4%
I actually think the liquidity with the SallieMae CD is worth the 0.2% as I said in my first comment, for the opportunity cost alone. I would rank it ahead of this Ally CD but curated it based on what you said. You never know what could open up and this is a hedge against rates rising higher due to unforeseen wage growth or other inflationary (from a CPE perspective) components that the Fed would use to justify more hikes than anticipated/priced in. Just my 2c, but anyway, buy the ibonds first this quarter.
I think you're thinking about this correctly. A 50bp move from the current rate isn't going to make a material difference in 5y CD yields, which seem to be between 4.3% and 4.5% at the time of writing. Instead, consider what WILL drive them:
1. The dot plot released in subsequent Fed meetings where Fed members provide forward guidance on the terminal rate.
2. The Fed's forecast of core inflation through 2024 and beyond (I believe they're looking at 3.1% long-run, but I might be off on that, don't want to check right now)
3. How 2-5y yields react to the above 2 points
4. How breakevens are pricing cuts moving forward. When, for how long, and how much as well as how aggressively.
With all that in mind, and this is really more of a thought exercise from a trading perspective than for consumers holding these products to maturity, I think the current 5y CD rates will have a positive real return as early as Q3 2024. I think less so of the US 5y mostly because it's trading at 3.5%, but even then I'd probably be long the US 5y rather than short.
I'm not intimately familiar with these banks' business models but a few of these rates, at a surface level, give off an "asleep at the wheel" vibe. The short bond trade is super crowded across funds and crowded trades usually don't go well.
If I were specifically in the market for 5y CDs (I'm not) I'd be buying them now, and I think this will be close to, if not the, secular terminal rate for this cycle.
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Hard to justify a CD with penalty at 4.6% when a no penalty at 4.4% exists (Sallie Mae/Savebetter). Give yourself the flexibility/liquidity option and give up the 0.2%, seems like the right move.
I have 20k just siting in my bank... Nearing 30k should I take out 20k and put it in the Sallie?
I don't play stocks nor crypto... I bought 350 worth of crypto and lost about 100 I hate losing money and I don't treat money like a toy what's your advice
I have 20k just siting in my bank... Nearing 30k should I take out 20k and put it in the Sallie?
I don't play stocks nor crypto... I bought 350 worth of crypto and lost about 100 I hate losing money and I don't treat money like a toy what's your advice
I would need to know your bigger financial picture and goals to give adequate advice and also I'm not a CFP or advisor so it's not really appropriate for me to give you advice. But I will say that the no-penalty CD is very low risk, as are government treasuries.
I was using VMFXX since it was the "settlement fund" and the $$ was "liquid" to quickly buy into other funds with.
That makes sense, didn't know it was one of the core position funds for Vanguard. Not worth putting it into a different fund for such a small difference.
I have 20k just siting in my bank... Nearing 30k should I take out 20k and put it in the Sallie?
I don't play stocks nor crypto... I bought 350 worth of crypto and lost about 100 I hate losing money and I don't treat money like a toy what's your advice
Don't follow investment advice from internet forums. You are talking to anonymous people who may have no clue what they're doing. Talk to someone that you know has expertise in the field to confirm it's what's best for you.
You can invest in anything in an IRA. But for best results stock market is a buy and hold for the long term. Going in and out of the market causes you to miss out on gains. I'm fully invested 80% stocks and 20% bonds in my accounts.
But why would I put this years 6K IRA fund into a sliding market? Why not do CD or savings and then put it in the market in like a year or two.
There's no reason to get a 4.6% CD when you can get a 4.65% treasury bill with the same duration. I've posted this in a lot of similar threads already, but the treasury bill has better liquidity and isn't subject to state or local income tax. You can buy treasuries through a normal brokerage like Fidelity without paying any commissions or fees.
I have 20k just siting in my bank... Nearing 30k should I take out 20k and put it in the Sallie?
I don't play stocks nor crypto... I bought 350 worth of crypto and lost about 100 I hate losing money and I don't treat money like a toy what's your advice
I am just shaking my head that you are asking random strangers on the internet on where to put the money, even after losing a lot on crypto. With apologies to this particular random stranger.
There is no substitute for learning a little about managing your money.
But why would I put this years 6K IRA fund into a sliding market? Why not do CD or savings and then put it in the market in like a year or two.
The core principle of any investment strategy is that you cannot time the market. You should have a risk profile and invest based on your tolerance for risk and your planning horizon.
The core principle of any investment strategy is that you cannot time the market. You should have a risk profile and invest based on your tolerance for risk and your planning horizon.
I'd rather make a conservative and guaranteed 4.6% than maybe make 10% (mutual/index fund) with a 20-30%+ downside risk in the next couple years.
I'd rather make a conservative and guaranteed 4.6% than maybe make 10% (mutual/index fund) with a 20-30%+ downside risk in the next couple years.
The key component here is long term with consistent and regular contributions whenever you hear "time beats timing". Sure it's ok to match inflation but you're not really gaining anything along with the fact these high rates won't last forever year over year. I'm only doing these short term yields myself simply because I don't know enough at the moment for what to do long-term.
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Edit: ^ The above has an argument against it depending on your view of how Feb-Apr CPI will impact the inflation component of the next i-bond rates. YMMV.
You didn't miss the boat at all btw, I just think this is a good time to buy. There's a lot of laymen inflationary talk and fearmongering going on but sharp traders who actually trade bonds are already looking ahead towards deflation here, and the retail interest-bearing products are going to catch up to that sentiment imo.
Anyway, in order after i-bonds if you don't need the money for 1-2 years:
1. 27-month (a little over 2 years but still) CD posted on SD today that was at 5%
2. 12-month t-bill (~4.65% or so, NOTE: This may be #1 if you live in a high income tax state)
3. CD like the one here for 4.6%
4. No-penalty CD at SallieMae for 4.4%
I actually think the liquidity with the SallieMae CD is worth the 0.2% as I said in my first comment, for the opportunity cost alone. I would rank it ahead of this Ally CD but curated it based on what you said. You never know what could open up and this is a hedge against rates rising higher due to unforeseen wage growth or other inflationary (from a CPE perspective) components that the Fed would use to justify more hikes than anticipated/priced in. Just my 2c, but anyway, buy the ibonds first this quarter.
1. The dot plot released in subsequent Fed meetings where Fed members provide forward guidance on the terminal rate.
2. The Fed's forecast of core inflation through 2024 and beyond (I believe they're looking at 3.1% long-run, but I might be off on that, don't want to check right now)
3. How 2-5y yields react to the above 2 points
4. How breakevens are pricing cuts moving forward. When, for how long, and how much as well as how aggressively.
With all that in mind, and this is really more of a thought exercise from a trading perspective than for consumers holding these products to maturity, I think the current 5y CD rates will have a positive real return as early as Q3 2024. I think less so of the US 5y mostly because it's trading at 3.5%, but even then I'd probably be long the US 5y rather than short.
I'm not intimately familiar with these banks' business models but a few of these rates, at a surface level, give off an "asleep at the wheel" vibe. The short bond trade is super crowded across funds and crowded trades usually don't go well.
If I were specifically in the market for 5y CDs (I'm not) I'd be buying them now, and I think this will be close to, if not the, secular terminal rate for this cycle.
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I don't play stocks nor crypto... I bought 350 worth of crypto and lost about 100 I hate losing money and I don't treat money like a toy what's your advice
I don't play stocks nor crypto... I bought 350 worth of crypto and lost about 100 I hate losing money and I don't treat money like a toy what's your advice
I was using VMFXX since it was the "settlement fund" and the $$ was "liquid" to quickly buy into other funds with.
I don't play stocks nor crypto... I bought 350 worth of crypto and lost about 100 I hate losing money and I don't treat money like a toy what's your advice
Sign up for a Slickdeals account to remove this ad.
I don't play stocks nor crypto... I bought 350 worth of crypto and lost about 100 I hate losing money and I don't treat money like a toy what's your advice
There is no substitute for learning a little about managing your money.
why doing Fidelity and not going to Vanguard and buy VUSXX discussed here earlier?
is VUXSS a new fund?
How does it compare to VMFXX?
Any Vanguard ET for treasurey?
I see on VG Site that have T Bills for extended duration, mid term and short term -
anyone familar can explain why going for one over the other?
Thank you
this cd is still 4.6%.
now starting to wonder if they'll raise it?
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5% capital one 11month cd